4 months ago • 2 mins
What’s going on here?
Oil titan Saudi Aramco saw profit slipping and sliding last quarter.
What does this mean?
Oil companies have been having a tough time of it this earnings season, and the world’s biggest oil and gas company was no different. See, OPEC+ – a group of oil-producing nations – has been trying to limit supply and bolster prices since late last year, but with the specter of a global slowdown looming, there was only so much it could do. In fact, the average price of a barrel took a 32% tumble versus the same period last year, so it was no surprise when Aramco’s profit slid by 38%, to just over $30 billion. But it wasn’t all bad news: that number was still ahead of expectations, and the firm upped payouts by a decent chunk to keep investors onside. And that – surprise, surprise – meant shares rose after the news.
Why should I care?
The bigger picture: Fueling a nation.
To truly grasp the scale of Aramco, consider this: that $30 billion profit was still more than the combined earnings of Shell, BP, Exxon, Chevron, and TotalEnergies last quarter. Such heft is necessary when you’re the backbone of a nation. After all, the Saudi Arabian government is the firm’s biggest shareholder, and those payouts are essentially a lifeline to the pretty pinched state coffers. So Aramco boosting its payouts isn’t just about keeping investors happy. It’s a calculated strategy to bolster the nation’s ongoing diversification away from oil, including ventures into mining metals essential to the decarbonization movement.
Zooming out: They’ve got chemistry.
China is Aramco's biggest oil customer, and the Saudi titan is expecting the world's second-biggest economy to continue to up its demand this year. But Aramco isn’t just thinking about the slippery elixir: the company confirmed it’s planning to build on its investments in the country's fast-growing chemicals sector too, further expanding its footprint there.
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